Fund Manager Summary
The fund managers believe that the outlook for GrainCorp Ltd presents significant opportunities, particularly with the potential for renewable energy expansion through biofuels. In their opinion, the recent upgrade in earnings guidance indicates a positive trajectory, with underlying net profit expected between $65m and $95m for the 2025 financial year. Additionally, the summer rainfall in Queensland and NSW is likely to enhance crop yields, further boosting profitability. Despite HMC Capital's recent selldown, which reflects market pressures, many fund managers see latent value in GrainCorp's assets, particularly its portfolio of ports and terminals. The recent share price fluctuations, hovering around $7.58, suggest that the market has yet to fully recognize GrainCorp's potential, making it a compelling investment opportunity.
Source: Trading View
Commentary From The Managers
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HMC Capital
30 Sept 2025
$9.00
Summary
- GrainCorp rose 16% over the quarter, driven by positive market conditions.
- September 2025 ABARES crop forecast update supports confidence in record crop volumes.
- Forecasts indicate a 30 million tonne ECA winter crop, which is 29% above the 10-year average.
- HMC Capital views this as a key earnings catalyst for stronger momentum into FY26.
- GrainCorp is no longer obligated to pay out under its Crop Production Contract.
- The company’s $75m buyback program (to March 2026) has executed ~$15m to date.
- Anticipation of further capital management as FY26 outlook firms up.
- Support for the Sustainable Aviation Fuel supply chain project gained traction in September.
- The Australian government announced a $1.1bn incentive programme for renewable fuels.
- This biofuels project may offer upside and revenue diversification for GrainCorp.
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Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
Commentary From The Managers
HMC Capital
30 Sept 2025
$9.00
- GrainCorp rose 16% over the quarter, driven by positive market conditions.
- September 2025 ABARES crop forecast update supports confidence in record crop volumes.
- Forecasts indicate a 30 million tonne ECA winter crop, which is 29% above the 10-year average.
- HMC Capital views this as a key earnings catalyst for stronger momentum into FY26.
- GrainCorp is no longer obligated to pay out under its Crop Production Contract.
- The company’s $75m buyback program (to March 2026) has executed ~$15m to date.
- Anticipation of further capital management as FY26 outlook firms up.
- Support for the Sustainable Aviation Fuel supply chain project gained traction in September.
- The Australian government announced a $1.1bn incentive programme for renewable fuels.
- This biofuels project may offer upside and revenue diversification for GrainCorp.
Summary
Clime Investment Management
31 Aug 2025
$8.11
- Clime Investment Management continues to hold a positive outlook on Graincorp Ltd.
- Recent price weakness has prompted modest additions to their position.
- Longer-range weather forecasts indicate substantial rainfall in drought-stricken areas.
- Forecasts cover regions in South Australia and parts of Victoria.
- Expectations of follow-up rain are anticipated as we head into autumn.
Summary
HMC Capital
1 Aug 2025
$7.58
- HMC Capital has reduced its stake in GrainCorp, no longer being a major shareholder.
- Shares sold between $6.85 and $8 from February 13 to July 30.
- Previously acquired a 5% stake at prices between $7.27 and $8.60.
- Market speculation surrounds HMC Capital's 21.9% stake in HomeCo Daily Needs REIT, valued at $2.7bn.
- GrainCorp holds valuable ports and terminals, with potential for asset spin-off or sale.
- GrainCorp's share price faced a plunge due to a profit warning in February.
- HMC Capital sees latent value in GrainCorp not reflected in the current share price.
- GrainCorp is exploring opportunities in renewable energy through biofuels.
- GrainCorp's share price fluctuated between $6 and $7.50 last April, recently closing at $7.58.
- Summer rainfall in Queensland and NSW is expected to enhance crop yields.
- GrainCorp upgraded its earnings guidance for FY2025 to a net profit between $65m and $95m.
- Underlying EBITDA guidance for FY2025 is projected between $285m and $325m.
- Previous EBITDA expectations were between $270m and $320m, with last year's at $268m.
- The selldown coincides with HMC Capital facing pressure to secure funds for its renewable energy acquisition.
Summary
HMC Capital
31 July 2025
$7.58
- HMC Capital trimmed its shareholding in GrainCorp.
- Stock is believed to be trading at a discount to its underlying asset value.
- Continues to hold a meaningful investment due to a supportive outlook for the upcoming winter crop.
- Potential for further capital management remains.
- After 12 months of engagement, prospects for strategic change are deemed limited.
- Capital is being re-allocated to alternative investments for better returns.
Summary
HMC Capital
30 June 2025
$7.78
- GrainCorp was a positive contributor to performance during the quarter, up 14.2%.
- 1H results were ahead of consensus, with underlying EBITDA 23% higher than the previous corresponding period (pcp).
- Full year guidance for FY25 was increased slightly.
- The company announced further capital management initiatives, including a 10cps fully franked special dividend to be paid in July.
- Buyback increased from $50m to $75m.
- GrainCorp has reached the payment cap under the Crop Production Contract, allowing for uncapped future upside from above-average crop years.
- Downside remains protected despite the uncapped upside.
- Strong core net cash position of approximately $300m.
- FY26 is expected to be another strong crop year following ABARES’ release of crop forecasts early in June.
- HMC Capital believes GrainCorp is well placed for further capital management over the next 12 months.
Summary
HMC Capital
31 May 2025
$7.61
- GrainCorp reported a 1H result ahead of consensus with underlying EBITDA 23% higher than the pcp.
- Full year guidance for FY25 has been slightly increased.
- Announcement of capital management initiatives, including a 10cps fully franked special dividend.
- Increase in the buyback from $50m to $75m.
- GrainCorp has reached the payment cap under the Crop Production Contract, allowing for uncapped future upside from above average crop years.
- Downside remains protected despite the uncapped upside.
- Strong core net cash position of approximately $300m.
- FY26 is expected to be another strong crop year based on ABARES’ forecasts.
- HMC Capital believes GrainCorp is well placed for further capital management over the next 12 months.
Summary
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
ANALYST INSIGHT
Equity Research Analyst
"Amidst swirling speculation, it seems HMC Capital's retreat from GrainCorp hints at deeper financial currents. With latent value and renewable energy prospects, GrainCorp could still surprise, but the stakes are high as market dynamics shift."
Last Updated: 30 Sept 2025
Query The Data
Frequently Asked Questions
Who is investing in Graincorp Ltd (ASX:GNC)?
Fund managers including HMC Capital and Clime Investment Management have invested in Graincorp Ltd (ASX:GNC).
Why do fund managers invest in Graincorp Ltd?
Fund managers invest in GrainCorp Ltd due to its strong asset base, including valuable ports and terminals, and potential for growth in renewable energy, particularly biofuels. Despite recent sell-offs, analysts see latent value in the company that isn't fully reflected in its share price. Positive earnings guidance and favorable weather conditions for crops further enhance its investment appeal.
What happened to Graincorp Ltd (ASX:GNC)?
Fund managers have invested in GrainCorp Ltd due to its strategically valuable asset base, including ports and terminals, and its potential for growth in renewable energy through biofuels. Despite recent sell-downs by HMC Capital, which cited limited near-term strategic change, the overall outlook remains positive, bolstered by favorable weather forecasts and an anticipated record winter crop. GrainCorp's earnings guidance has been upgraded, and the company is executing a buyback program, indicating strong financial health and potential for future capital management.